6 Common Mistakes that Family Business Owners Make When Preparing for the Next Generation to Take Over

Many owners of family businesses underestimate the organizational succession plan necessary to transition their company to the next generation. A business owner will come to me, ready to retire within a short period of time, and after a few key questions, they realize that they really have no organizational succession plan in place, in order to turn the business over to the next set of leaders.

  1. Not starting to plan early enough. Geier recommends setting a clear and defined action plan and timeline, starting at least five to ten years in advance of your expected event.
  2. Taking too much time to give authority to your successor. Business leaders need to involve their potential successor in the transition process early on. They must involve them in the decision-making process, and ultimately give them the responsibility of making the decisions on their own. Trust is a huge part in all phases of the transition, and if you do not trust your heir apparent early on, they won’t have the experience necessary to take over.
  3. Mismatched visions of the future. It is vital that there is a shared vision for the future of the company so your planning will efficiently coordinate with the evolution of the company after the next generation takes over.
  4. Keeping your plans secret. It is important to strategize, communicate and implement a consistent plan. Getting everyone on board and working in the same direction towards the same goals will insure a smooth transition. The new generation will already feel ownership in the plan and be more inclined to make it succeed.
  5. Assuming that what works for one business will work for yours. Avoid the cookie cutter model when it comes to your organizational succession planning transitions. While it can be beneficial to follow benchmarks, your culture, family and business are different from others. Take care to customize your succession plan to fit your uniqueness.
  6. Tying the business to your own personal identity. Give the business a broader identity. True, you shaped it and perhaps even birthed it. However, with a broader identity, you will give everyone a sense of ownership during the transition. When speaking of the business, refer to it as ‘ours’ rather than ‘mine’. This allows your successor to adjust to the idea that they are included and eventually taking over. It’s okay to let go.

For more information on how Human Capital Consulting Partners can assist you in developing your company’s recruiting process, contact us.

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